Rupee likely to test 76.50 level this year, depreciation bias deepens: Experts
The rupee has mostly been weak against the US dollar in recent months.
Strong greenback, peaking crude prices, and Covid-19 have deepened the depreciation bias for the domestic currency, according to experts. The Indian rupee is likely to test at the 76-76.50 level. The currency is likely to witness a consolidation in the vicinity of the current level before being pulled towards the depreciation bias.
In recent months, the rupee has mostly been weak against the US dollar. On the other hand, the equity market has been reporting a surge with occasional blips.
The Indian rupee was among the worst hit currency in the Asian market with the ongoing economic crisis.
The short term outlook for the USD-INR pair remains bearish, with prospects of 73.50 mark, experts have said. The domestic unit is likely to skew towards 75.50-76 level on a long-term trajectory. It is believed it could even test the 77-mark by year-end.
Federal Reserve’s outlook on rates and recovery of the US economy and the Joe Biden administration’s stance towards China, is going to dictate the future trend for the rupee.
“The US Fed in its last policy meeting was hawkish but the central bank member’s stance on inflation, growth, and the bond tapering programme going forward could trigger volatility for the greenback,” said Gaurang Somaiyaa, forex and bullion analyst at Motilal Oswal Financial Services.
The RBI policy statement together with the trajectory of the fund inflows into India will provide cues for the rupee movement on the domestic front. Another factor to decide currency’s movement will be inflation.
“A surge in crude prices in the last quarter contributed to higher inflation. A further rally in global crude oil prices could start to pinch the overall import bill of India,” Somaiyaa said.